NATIONAL COUNCIL ON U.S.­ARAB RELATIONS 20TH ANNUAL ARAB­U.S. POLICYMAKERS CONFERENCE “Dynamics of Recent Events in the Arab World: Framing the Arab and U.S. Responses” FRIDAY, OCTOBER 28, 2011 RONALD REAGAN BUILDING & INTERNATIONAL TRADE CENTER WASHINGTON, D.C. Geopolitical Dynamics: Iran Chair: Dr. John L. Iskander – Chair, Near East and North Africa Area Studies, Foreign Service Institute, U.S. Department of State Speakers: Dr. Kenneth Katzman – Specialist in Middle East Affairs in the Foreign Affairs, Defense, and Trade Division, Congressional Research Service, Library of Congress Dr. Flynt Leverett – Director, Iran Initiative, and Senior Research Fellow, American Strategy Program, New America Foundation; and author, “Dealing with Tehran: Assessing U.S. Diplomatic Options toward Iran” and “Inheriting Syria: Bashar’s Trial by Fire” Dr. Janne Nolan – Director, Nuclear Security Programs, American Security Project; former Professor of International Affairs and Deputy Director of the Ridgway Center, University of Pittsburgh Mr. Afshin Molavi – Senior Fellow, New America Foundation; Senior Middle East Advisor, Oxford Analytica; and author, “The Soul of Iran” National Council on U.S.‐Arab Relations 1730 M St NW, Ste 503, Washington, DC 20036 ncusar.org Transcripts by Patrick Ryan & Associates, LLC ‐ www.PatRyanAssociates.com Remarks as delivered [Dr. John Iskander] Good afternoon. Hello. Okay. Hi everybody, my name is John Iskander. Welcome to the last full panel of the day, with the topic of course being Iran. We have four sessions today that I’m very much looking forward to hearing, and I think that you will as well. The theme in effect of this afternoon’s session has to do with the question of strategy and of strategic power, as well as sort of the place in the world. In Iran, the thing of course when we think of Iran is this question of what is Iran’s place? Its place in the Gulf, its place more broadly in the world order, and that this has been the huge challenge. I should’ve started, I work at the State Department, I should start by saying I’m here purely on my personal capacity, so I’m not representing the State Department. I can say one of the thing that of course the challenges, among the challenges, precisely for us, for the United States, but also for the other Gulf countries and the countries of the Middle East is figuring out the answer to this question. What is the role and status of Iran? How can Iran be integrated into or excluded from any kind of security architecture; generally the focus here is on exclusion from. Are there ways of integrating into? How does this all work? What’s the role? And what’s our domestic politics? What do these things all have to say about this? So we’re going to have differing points of view, which is actually a great deal more interesting than having everybody agree I suppose on a topic like this, and it’s Iran, so we can have lots of differing points of view. So we’re going to start off, the order is going to be Ken Katzman and Flynt Leveritt starting off looking on the questions of sort of power in the Gulf, vis a viS the United States, and Iran sort of more broadly. And then turning to Janne Nolan, who’s going to take us looking at U.S. strategy, also towards Iran, and then concluding with Afshin Molavi with the title and the topic of Iran and the GCC in a regional and global context. Ken Katzman, of course, comes to us from the Congressional Research Service. He’s a senior Middle East analyst for U.S. Congress. As you all know if you were here yesterday you’ve heard the introduction, and many of you know him anyways. He’s well‐respected and a well known scholar working on Iran‐Iraq, Persian Gulf states, and much, much more. Flynt Leveritt teaches international affairs at Penn State. He’s a senior research fellow at the New America Foundation. Ashvin Molavi, a senior research fellow, New America Foundation’s Senior Middle East Advisor, Oxford/Analytica co‐Director, World Economy Roundtable, and if you are on Twitter, you can get his Tweets. Janne Nolan is the Director of the Nuclear Security Programs at the American Security Project, and also with a great deal of experience on this specific issue, nuclear issues, strategic questions more broadly. So thanks very much. Please join me in welcoming the panel, and then we will take questions at the end. Our session’s going to end sharply at five. Once the speakers have all 2011 Arab-U.S. Policymakers Conference - ncusar.org 2 gone, had their chance to speak, we will take questions as the usual custom. Thank you, join me in welcoming our panel. Ken Katzman. [Dr.Ken Katzman] Thank you very much to the council for inviting me. Speaking in a personal capacity today. I know originally on the panel today was supposed to be Flynt’s lovely wife, and I’m substituting, so I was thinking of coming today in drag, but then I looked in my closet and those clothes weren’t clean. Again, I’m in a personal capacity today. The title of my talk is the decline of the Islamic Republic of Iran, the decline of the Islamic Republic of Iran. By many indications, the high‐water mark for the Islamic Republic of Iran is long passed. Iran is on a steepening slope of decline that is likely to result either in wholesale change of regime, or a dramatic alteration of the power structure. Iran’s political system is like a fruit that is rotting from the inside, and the rot is spreading outwardly at a rapid rate. Under Ayatollah Khomeini, the authority of the Supreme Leader was unquestioned. Under Ayatollah Ali Khamenei that authority is questioned regularly, to the point where the Supreme Leader is now openly maneuvering to either dismiss the current President, weaken him severely, or potentially he’s raised the issue of abolishing the post of President all together. Doing so, were that the choice, that would further distance the regime from the population, because the head of government would not be directly elected by the people. A Prime Minister would be selected by the Parliament, but the head of government would not be directly elected by the people. The next Supreme Leader and Khamenei is not a young man obviously. He was at Khomeini’s right hand, he was a disciple of Ayatollah Khomeini he’s not young, and he’s certainly not going to live forever. Even if the current palace structure continues, Iran’s political system is increasingly anachronistic and unsatisfactory to Iran’s population. One authoritarian regime after the other in the region is crumbling, potentially including Iran’s close ally, Bashir al‐Assad. True, Iran was able to defeat thus far and suppress the green uprising, green movement uprising of 2009, but many believe there will be another uprising at some point, because large segments of the Iranian public are openly dissatisfied. Furthering that sentiment is Iran’s traditional condescending attitude toward the Arabs. Iran sees itself as an ancient civilization full of universities, learning, scholarship, et cetera, yet now Iran is actually behind as the Arab world modernizes its politics, and Iran remains mired in its outdated, backward political system. This serves as additional motivation for pro‐green movement Iranians to become active again. Iran is probably more isolated than at any time. Foreign investors are pulling out of its energy sector. It is cut off from the international banking system to the point where oil customers are having difficulty paying for the oil, and numerous international firms have reduced or ended their presence in Iran. A key indicator is how Iran’s neighbors are treating it. Normally, the neighbors would be the least likely to risk upsetting Iran, or going against it, or upsetting traditional trading patterns; however, we are now seeing an increasing willingness of even Iran’s neighbors to 2011 Arab-U.S. Policymakers Conference - ncusar.org 3 help the United States and others strangle Iran’s economy. Last year, the U.A.E., one of the most vulnerable to an Iranian backlash implemented the full authority of Resolution 1929, to restrict Iranian banking activity in U.A.E. Kuwait has stopped selling gasoline to Iran. Turkey has stopped some Iranian weapons shipments transiting Turkey, en route to Syria or to Hezbollah in Lebanon. Turkey is actively now working against Iran’s main ally, Bashar al‐Assad. India has placed billions of dollars of oil payments in escrow rather than deal with sanction banks that would be needed to process oil payments to Iran. Iran’s central bank is running short of hard currency, because of the difficulty in processing these payments, and the Riyal is falling, because the central bank serves to stabilize the Iranian currency. In line with the payments difficulties, many observers tell me they are seeing a lot more Chinese‐made goods showing up in stores, suggesting that reports that Iran is being paid for its oil with goods, and not hard currency, suggesting those reports are accurate. Following the Iran‐Iraq War, which ended in 1988, Iran purchased a large quantity of conventional weaponry from China and Russia. Those arms are now out of date, and Iran is banned by U.N. Resolutions from buying any new heavy weaponry. It will not be long before Iran’s arms deteriorate to the point where Iran can barely defend itself. The deterioration of the support for the regime is increasingly evident in rampant official corruption.